2021-01-21T18:46:00+02:00 Economy 2024-08-15T07:27:20+03:00

Ukrainian news

Inflation Will Accelerate In H1, 2021 But Return To Target Range Of 5% ± 1 p.p. In H1, 2022 – NBU

Inflation Will Accelerate In H1, 2021 But Return To Target Range Of 5% ± 1 p.p. In H1, 2022 – NBU

Inflation will accelerate in the first half of 2021 but return to the target range of 5% ± 1 percentage point in the first half of 2022.

The National Bank of Ukraine announced this in a statement, the Ukrainian News Agency reports.

"The National Bank has revised its forecast for the rise of the inflation rate in 2021 upward from 6.5% to 7%. The acceleration of inflation in the first half of the year will be determined by rapid consumer demand, higher energy prices, and last year's worse crop harvest. In addition, business production costs will increase, particularly wages. The rate of increase of administratively regulated prices will remain high due to the increase of the excise taxes on tobacco products and the rise in electricity prices," the bank said in the statement.

According to the statement, the influence of pro-inflationary factors will weaken in the future, which will reverse the inflationary dynamics.

The increase of supply of newly harvested agricultural products will slow down food inflation and the effect of the low comparison base for individual products will weaken at the end of the year.

The monetary policy of the National Bank of Ukraine will also be aimed at easing the fundamental pressure on prices from steady consumer demand and improving inflationary expectations.

As a consequence, core inflation is expected to be 5.9% at the end of 2021, and headline inflation is expected to return to the target range again in the first half of next year.

Inflation will be around the medium-term target of 5% in 2022-2023.

The decline of the economy in 2020 was significantly less than expected, and it will grow at about 4% in 2021 and subsequent years.

As Ukrainian News Agency earlier reported, business expectations for economic development have slightly worsened, inflation and devaluation expectations have increased, and 44.5% of enterprises expect the hryvnia’s exchange rate to fluctuate in the range of 29.01-30.00 UAH/USD.